"I would say that costs are relative to the particular payer, rather than the currency."

Agreed. However, I would say that the rich man (don't forget, wealth is highly correlated with educational achievement, intelligence, and fiscal prudence) spends that dollar more wisely than the poor man does.

In terms of "stimulus", the US government is borrowing 40 cents of every dollar it spends right now. From a crude point of view, any marginal dollar spent would need to show a return on investment of 40% in order to be effective/efficient/worthwhile. Without that 40% return - and good luck finding that type of return - we are simply kicking the debt can further down the road, bringing us back to the point of the article.

I don't know what kind of halucinogenic you're on, Chauncey, but if you think a $16 trillion dollar deficit was accumulated paying for the defense of the free world, it must be something really powerful. In case you hadn't noticed, every major expansion of social-welfare programs in the U.S., with the exception of the Environmental Protection Agency under Nixon, was initiated by the Democratic Party. To be sure, the Republicans are complicit in that far too often they've been the "me too" or "Democrat Lite" party, but in terms of pandering to the masses with bread and circuses, they're amateurs. The real pros, the whores you can always count on to buy votes in newly creative ways by instituting new "programs" -- should they create a Department of Chin Wiping for droolers like you, Chauncey? -- are the Democrats. The Senate has been under Democratic Party control since 2006. By law (1974) the Senate is required to submit a budget annually for each fiscal year, just as the House is. The Senate has not promulgated a budget in *more than 3 years.* And you have the audacity to call people who argue for reducing debt and staying within budgets "extremists"? Be quiet, clown, you're in way over your head.

Sad to see the confusion about 'entitlements' over on the other side of the pond. Social security DOES NOT contribute to our deficit. Please understand that.

No mention that at the end of the Clinton administration (Democrat) we were paying down the then deficit (run up by Reagan) and making progress in the right direction.

Then George Bush arrived and we immediately went in the other direction. Then two unfunded wars and a huge Medicare pharmacy benefit (purposely sold to Congress with phony numbers) and then the de-regulation of our banks and a huge recession.

Of course it's easy to mistake correllation for causation, and the degree of a causal relationship is often quite uncertain. Still, I've seen a considerable amount of research suggesting that high levels of education actually prevent people from becoming wealthy. But that's a complicated digression.

Wise spending sounds to me like an idea Milton Friedman liked to use quite often, although I find it difficult to believe that luxury items of the proportion seen today are "wiser" expenditures than anything a person of moderate means could ever possibly buy. This idea of wisdom is also difficult for me to relate to economic stimulus.

The national debt seen today as a proportion of GDP is not by any means unprecedented, and while I do acknowledge the somewhat dubious possibility that sufficient enough growth may not come in response to the stimulus measures that have been passed, it is a near certainty that a perpetually destructive downward spiral would result from taking no action at all. It's also important to see that once one is in debt, a simple refusal to take on any additional debt can destroy all of the benefit of the initial commitment in the first place. For example, if one were to finance his/her higher education via debt for three years, and suddenly refuse to take on a fourth, I might not deem this type of short-sightedness "wise".

Very interesting to look at this analysis from the other side of the Atlantic ocean...
Don’t forget a major difference between USA and Europe: Europe today is not one single country but rather an association of voluntary members of various sizes, culture, history, economical health etc. all progressing slowly toward a political integration. Today only 17 out of 27 members share the same currency, excluding the 3rd European economy: UK.
Managing such a diverse "conglomerate" is much more complex than a simple game opposing Republicans to Democrats - which is what is happening at the level of each individual country (whatever the local wording : left/right, socialists/conservatives, moderate/liberal…).
The debt crisis has forced to increase political coordination at European level, and it is useless to blame political leaders after the event not to have acted and reacted fast enough. Again, situations are diverse and so are economic priorities. But despite this, the European zone has shown some degree of solidarity.
The big concern for each individual country is that creating more Europe means losing sovereignty. And this is not an easy choice, despite the benefits of building the largest single economy in the world. This will take time, a lot of time, before Europe is turned into a federation of member states and for the time being most of the efforts need to be made by each individual country.
A more accurate comparison would be between the US and France. Hollande and its majority just inherited the burden of the debt crisis and they need to manage it. The “good” thing with the Eurozone debt problem is that it shows that structural reforms were not addressed in the last two decades or so… Now, budget trimming is no longer negotiable although it hurts much more to tackle public spending and raise taxes when GDP shows no growth and unemployment is rising… Germany is ahead of the race thanks to the “re-merger” of the country in the late 90s which gave a boost to serious government budgeting, and this is positive for the short term. Looking ahead there is no way for countries like France to escape from a drastic reduction of its Budget deficit and return to a surplus situation in the next few years, and reduce debt. The challenge will be to arrive at a nationwide compromise to redefine an acceptable level of social welfare. To a certain extent this may bring most of the European economies closer to each other – which will set the path for further integration.

U.S. is having goerment deficits of 1.3 trllion dollar a year. Obama has more deficits than all the previous presidents combined and George Bush had more government deficits than all the previous presidents ombined.... How long can this last?

@TheEconomist what did you expect when you endorsed Obama? That was one of your weaker & most disappointing moments of late...if you don't get the job done you should lose your job. What more did we need to see from this president (and I voted for him in 2008)? Similarly if Romney had won and been so timid throw him out as well. Not looking forward to four more years of Obama's passive leadership style with limited to no courage on domestic issues. Call him out for it!

To the best of my knowledge, your belief that millionaires are taxed at lower rates than their secretaries is incorrect. "They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government. ... "The 10 percent of households with the highest incomes pay more than half of all federal taxes. They pay more than 70 percent of federal income taxes, according to the Congressional Budget Office."
Source:http://news.yahoo.com/fact-check-rich-taxed-less-secretaries-070642868.html

It's true that some of their income is taxed at a lower rate but that is investment income that was already taxed once before it was invested. So the total tax rate on that income is the sum of the two taxes levied on that income.

"This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank."

"Households making between $50,000 and $75,000 will pay an average of 15 percent of their income in federal taxes."

After reading this article, I am no longer confident in my views on the matter. I previously believed America should adapt to a more European economy. We have had loads of problems here in the US-- millionaires can get taxed at a lesser rate than their secretaries (note: this not an exaggeration). It's no wonder the deficit is so large. The government puts out more than it takes in, and this has been happening for decades. However, the European model seems fraught with problems as well. Perhaps the solution lies somewhere in the middle. Also, I'd like to personally thank the Brits for hitting both the US and the Eurozone in one swing. Oh, and also for the cover art- brilliant, if inflamatory.

I think the USSR did invade Czechoslovakia and Hungary (twice) and Afghanistan, and might therefore be considered a threat to the people of those nations. But I know how it is to be forgetful, for I think I've omitted an invasion or two, but I don't recall.